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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________ to
_______________
Commission File Number: 0-18933
ROCHESTER MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1613227
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE ROCHESTER MEDICAL DRIVE,
STEWARTVILLE, MN 55976
(Address of principal executive offices) (Zip Code)
(507) 533-9600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
YES X NO
------ ------
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act)
YES NO X
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
5,401,750 Common Shares as of May 2, 2003.
TABLE OF CONTENTS
ROCHESTER MEDICAL CORPORATION
REPORT ON FORM 10-Q
FOR QUARTER ENDED
MARCH 31, 2003
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets -- March 31, 2003 and September 30, 2002...................... 3
Statements of Operations -- Three months ended March 31, 2003 and 2002;
Six months ended March 31, 2003 and 2002 .................................... 4
Statements of Cash Flows -- Six months ended March 31, 2003 and 2002 ........ 5
Notes to Financial Statements ............................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ....................................................... 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk ............ 12
Item 4. Controls and Procedures ............................................... 12
PART II. OTHER INFORMATION ......................................................... 13
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
ROCHESTER MEDICAL CORPORATION
BALANCE SHEETS
MARCH 31, SEPTEMBER 30,
2003 2002
------------ ------------
(UNAUDITED)
ASSETS:
Current assets:
Cash and cash equivalents ......................................... $ 520,626 $ 411,618
Marketable securities ............................................. 4,036,386 4,052,389
Accounts receivable ............................................... 2,226,531 1,905,442
Inventories ....................................................... 3,681,869 3,577,931
Prepaid expenses and other assets ................................. 473,378 218,183
------------ ------------
Total current assets ........................................ 10,938,790 10,165,563
Property and equipment:
Land and buildings ................................................ 5,509,135 5,509,135
Equipment and fixtures ............................................ 10,822,177 10,680,442
------------ ------------
16,331,312 16,189,577
Less accumulated depreciation ..................................... (7,527,754) (6,928,052)
------------ ------------
Total property and equipment ................................ 8,803,558 9,261,525
Intangible assets:
Patents, less accumulated amortization ............................ 207,845 209,078
------------ ------------
Total assets ......................................................... $ 19,950,193 $ 19,636,166
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable .................................................. $ 511,723 $ 633,934
Accrued expenses .................................................. 789,005 908,301
Deferred revenue .................................................. 100,000 100,000
Current maturities of capital leases .............................. 4,626 --
------------ ------------
Total current liabilities ................................... 1,405,354 1,642,235
Long-term liabilities:
Deferred revenue .................................................. 800,000 850,000
Long-term portion of capital leases ............................... 22,206 --
Shareholders' equity:
Common Stock, no par value:
Authorized -- 20,000,000
Issued and outstanding shares (5,390,750 - March 31, 2003;
5,329,250 - September 30, 2002) .......................... 41,625,021 41,253,128
Accumulated deficit ............................................... (23,836,445) (24,055,793)
Unrealized gain (loss) on available-for-sale securities ........... (65,943) (53,404)
------------ ------------
Total shareholders' equity .................................. 17,722,633 17,143,931
Total liabilities and shareholders' equity ........................... $ 19,950,193 $ 19,636,166
============ ============
Note -- The Balance Sheet at September 30, 2002 was derived from the audited
financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See Notes to Financial Statements
3
ROCHESTER MEDICAL CORPORATION
STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
------------------------- -------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net sales .............................. $ 3,718,203 $ 2,553,431 $ 7,256,860 $ 4,879,863
Cost of sales .......................... 2,374,590 1,900,925 4,714,429 3,651,983
----------- ----------- ----------- -----------
Gross profit ........................... 1,343,613 652,506 2,542,431 1,227,880
Costs and expenses:
Marketing and selling ............... 526,890 481,609 1,077,928 1,017,663
Research and development ............ 213,089 243,064 419,972 433,559
General and administrative .......... 504,319 501,955 926,683 953,253
----------- ----------- ----------- -----------
Total operating expenses ........ 1,244,298 1,226,628 2,424,583 2,404,475
----------- ----------- ----------- -----------
Income (loss) from operations .......... 99,315 (574,122) 117,848 (1,176,595)
Other income (expense):
Interest income, net ................ 42,255 51,345 84,880 109,406
----------- ----------- ----------- -----------
Net income (loss) ...................... $ 141,570 $ (522,777) $ 202,728 $(1,067,189)
=========== =========== =========== ===========
Net income (loss) per common share -
basic and diluted ...................... $ 0.03 $ (0.10) $ 0.04 $ (0.20)
Weighted average number of common shares
outstanding - basic .................... 5,361,008 5,328,500 5,345,826 5,328,500
=========== =========== =========== ===========
Weighted average number of common shares
outstanding - diluted .................. 5,619,962 5,328,500 5,572,935 5,328,500
=========== =========== =========== ===========
See Notes to Financial Statements
4
ROCHESTER MEDICAL CORPORATION
STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED
MARCH 31,
--------------------------
2003 2002
----------- -----------
OPERATING ACTIVITIES:
Net income (loss) ................................................... $ 202,728 $(1,067,189)
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Depreciation and amortization ....................................... 624,633 636,955
Changes in assets and liabilities:
Accounts receivable ................................................. (321,090) 165,410
Inventories ......................................................... (103,937) (888,608)
Other current assets ................................................ (255,195) (122,603)
Accounts payable .................................................... (122,210) 4,668
Deferred revenue .................................................... (50,000)
Other current liabilities ........................................... (92,465) 110,937
----------- -----------
Net cash provided by (used in) operating activities ................. (117,536) (1,160,430)
INVESTING ACTIVITIES:
Capital expenditures ................................................ (141,735) (126,708)
Patents ............................................................. (23,698) (25,500)
Sales (purchases) of marketable securities, net ..................... 3,464 4,140
----------- -----------
Net cash provided by (used in) investing activities ................. (161,969) (148,068)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock .............................. 388,513 --
----------- -----------
Net cash provided by (used in) financing activities ................. 388,513 --
Increase (decrease) in cash and cash equivalents ....................... 109,008 (1,308,498)
Cash and cash equivalents at beginning of period ....................... 411,618 1,842,796
----------- -----------
Cash and cash equivalents at end of period ............................. $ 520,626 $ 534,298
=========== ===========
See Notes to Financial Statements
5
ROCHESTER MEDICAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2003
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. These financial
statements should be read in conjunction with the financial statements and
related notes included in the Company's 2002 Form 10-K. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three- month and six-month periods ended March 31, 2003 are not
necessarily indicative of the results that may be expected for the year ending
September 30, 2003.
NOTE B -- NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per share are calculated in accordance with Financial
Accounting Standards Board Statement No. 128, "Earnings Per Share." The
Company's basic net income per share is computed by dividing income by the
weighted average number of common shares outstanding during the period. Diluted
net income per share is computed by dividing income by the weighted average
number of common shares outstanding during the period, increased to include
dilutive potential common shares issuable upon the exercise of stock options
that were outstanding during the period. A reconciliation of the numerator and
denominator in the basic and diluted net income (loss) per share calculation is
as follows (in thousands, except per share):
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------- ----------------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2003 2002 2003 2002
--------- --------- --------- ---------
Numerator
Net income (loss) ......................... $ 142 $ (523) $ 203 $ (1,067)
Denominator
Denominator for basic net income per share-
weighted average shares outstanding ..... 5,361 5,329 5,346 5,329
Effect of dilutive stock options .......... 259 -- 227 --
Denominator for diluted net income per
share-weighted average shares outstanding 5,620 5,329 5,573 5,329
Basic and diluted net income per share ....... $ 0.03 $ (0.10) $ .04 $ (0.20)
========= ========= ========= =========
6
Employee stock options of 379,000 for the second quarter of fiscal year 2003 and
for the six months ended March 31, 2003 have been excluded from the diluted net
income per share calculation because their exercise prices were greater than the
average market price of the Company's common stock.
NOTE C -- STOCK BASED COMPENSATION
The Company accounts for employee stock options in accordance with APB 25,
"Accounting for Stock Issued to Employees." Under APB 25, the company recognizes
no compensation expenses related to employee stock options, since options are
always granted at a price equal to the market price on the day of grant.
To determine the pro forma impact, the fair value of stock options is
estimated on the date of grant using the Black-Scholes option-pricing model and
is then hypothetically amortized to compensation expenses over the four-year
vesting period. The pro forma impact for the three-month and six-month periods
ended March 31 follows (in thousands, except per share):
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
---------------------- ----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Reported Net Income (Loss) .................. $ 142 $ (523) $ 203 $ (1067)
Pro Forma Impact of Expensing Stock Options . (134) (191) (268) (381)
--------- --------- --------- ---------
Pro Forma Net Income (Loss) ................. $ 8 $ (714) (65) $ (1,448)
Reported Basic Net Income (Loss) Per Share .. $ 0.03 $ (0.10) $ 0.04 $ (0.20)
Pro Forma Impact of Expensing Stock Options . $ (0.03) $ (0.04) $ (0.05) $ (0.07)
--------- --------- --------- ---------
Pro Forma Basic Net Income (Loss) Per Share . $ 0.00 $ (0.14) $ (0.01) $ (0.27)
Reported Diluted Net Income (Loss) Per Share $ 0.03 $ (0.10) $ 0.04 $ (0.20)
Pro Forma Impact of Expensing Stock Options . $ (0.03) $ (0.04) $ (0.05) $ (0.07)
--------- --------- --------- ---------
Pro Forma Diluted Net Income (Loss) Per Share $ 0.00 $ (0.14) $ (0.01) $ (0.27)
NOTE D -- INVESTMENTS IN MARKETABLE SECURITIES
As of March 31, 2003, the carrying value of the Company's marketable
securities, which consisted primarily of corporate bonds and commercial paper,
was $4.0 million. This total included a $1.0 million corporate bond from Pacific
Gas & Electric ("PG&E") with a carrying value of $920,000 on March 31, 2003.
This bond matured December 24, 2001 and, although PG&E remains current on its
interest payment obligations, the principal amount of this bond has not yet been
paid. On April 6, 2001, PG&E filed for Chapter 11 bankruptcy protection. In
2002, PG&E and the State of California asked PG&E's creditors to vote on two
separate reorganization proposals. A certification of the results of voting was
filed with the U.S. Bankruptcy Court for the Northern District of California on
September 9, 2002. However, as of March 31, 2003, the bankruptcy court had not
confirmed either plan of reorganization. While PG&E's management has stated
their intent to pay their creditors, the numerous political and economic factors
influencing the California utility market coupled with PG&E's bankruptcy filing
could potentially impact the timing and/or actuality of payments. However, the
Company currently believes that it will realize the full value of this
investment.
NOTE E -- INVENTORIES
Inventories consist of the following:
7
MARCH 31, SEPTEMBER 30,
2003 2002
----------- ------------
Raw materials ................................ 744,977 595,971
Work-in-progress ............................. 1,848,941 1,881,150
Finished goods ............................... 1,187,951 1,200,810
Reserve for inventory obsolescence ........... (100,000) (100,000)
----------- ------------
$ 3,681,869 $ 3,577,931
=========== ============
NOTE F -- COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) includes net income (loss) and all other
nonowner changes in shareholders' equity during a period.
The comprehensive income (loss) for the three-month and six-month periods
ended March 31, 2003 and 2002 consists of the following:
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
-------------------------- --------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net income (loss) .................. $ 141,570 $ (522,777) $ 202,728 $(1,067,189)
Unrealized gain (loss) on securities
held, net .......................... (5,185) 79,503 (12,539) 181,288
----------- ----------- ----------- -----------
Comprehensive income (loss) ........ $ 136,385 $ (443,274) $ 190,189 $ (885,901)
=========== =========== =========== ===========
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the fiscal periods indicated, certain
items from the statements of operations of the Company expressed as a percentage
of net sales.
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
------------------ ----------------
2003 2002 2003 2002
------- ------- ------ ------
Total Net Sales ..................... 100% 100% 100% 100%
Cost of Sales ....................... 64% 74% 65% 75%
------- ------- ------ ------
Gross Margin ................... 36% 26% 35% 25%
Operating Expenses:
Marketing and Selling .......... 14% 18% 15% 21%
Research and Development ....... 6% 10% 6% 9%
General and Administrative ..... 14% 20% 13% 19%
------- ------- ------ ------
Total Operating Expenses ............ 34% 48% 34% 49%
Income (Loss) From Operations ....... 3% (22%) 2% (24%)
Interest Income, Net ................ 1% 2% 1% 2%
------- ------- ------ ------
Net Income (Loss) ................... 4% (20%) 3% (22%)
======= ======= ====== ======
Three Month and Six Month Periods Ended March 31, 2003 and March 31, 2002
Net Sales. Net sales for the second quarter of fiscal 2003 increased 46%
to $3,718,000 from $2,553,000 for the comparable quarter of last fiscal year.
The sales increase resulted from increased sales to private label customers and
increased branded sales, in both cases particularly in the international market.
Net sales for the six months ended March 31, 2003 increased 49% to
$7,257,000 from $4,880,000 for the comparable six-month period of last fiscal
year. The six-month sales increase primarily resulted from an increase in
private label sales, as well as an increase in branded sales. Net sales for the
six-month period ended March 31, 2003 were affected by a significant increase in
sales to one private label customer.
Gross Margin. The Company's gross margin as a percentage of net sales for
the second quarter of fiscal 2003 was 36% compared to 26% for the comparable
quarter of last fiscal year. The current quarter's margin primarily reflects the
Company's increased level of net sales offset against a relatively flat level of
fixed overhead expense.
The Company's gross margin as a percentage of net sales for the six months
ended March 31, 2003 was 35% compared to 25% for the comparable six-month period
of last fiscal year. Factors related to the six-month margin are generally
consistent with those discussed above for the current quarter.
9
Marketing and Selling. Marketing and selling expense for the second
quarter of fiscal 2003 increased 9% to $527,000 from $482,000 for the comparable
quarter of last fiscal year. The increase in marketing and selling expense is
primarily due to increased advertising costs for the Company's new hydrophilic
intermittent catheters and costs associated with the recruitment of sales
personnel.
Marketing and selling expense for the six months ended March 31, 2003
increased 6% to $1,078,000 from $1,018,000 for the comparable six-month period
of last fiscal year. Factors affecting the comparative six-month expense levels
are generally consistent with those discussed above for the current quarter.
Research and Development. Research and development expense for the second
quarter of fiscal 2003 decreased 12% to $213,000 from $243,000 for the
comparable quarter of last fiscal year. The decrease in research and development
expense is primarily related to a comparatively higher level of development
costs relating to the Company's intermittent catheters in the prior year's
second fiscal quarter.
Research and development expense for the six months ended March 31, 2003
decreased 3% to $420,000 from $434,000 for the comparable six-month period of
last fiscal year. Factors affecting the comparative six-month expense levels are
generally consistent with those discussed above for the current quarter.
General and Administrative. General and administrative expense for the
second quarter of fiscal 2003 were generally flat as compared to general and
administrative expense for the comparable quarter of last fiscal year, with
expenses of $504,000 in the second quarter of fiscal 2003, versus expenses of
$502,000 for the comparable quarter of last fiscal year.
General and administrative expense for the six months ended March 31, 2003
decreased to $927,000 from $953,000 for the comparable six-month period of last
fiscal year. The decrease in general and administrative expense is primarily
related to higher severance costs in the comparable six-month period of last
fiscal year.
Interest Income. Interest income for the second quarter of fiscal 2003
decreased 19% to $42,000 from $52,000 for the comparable quarter of last fiscal
year. The decrease in interest income reflects the comparatively lower average
level of invested cash balances in the current quarter due to the utilization of
cash for operations, together with an overall lower interest rate on short-term
investments.
Interest income for the six months ended March 31, 2003 decreased 23% to
$85,000 from $110,000 for the comparable six-month period of last fiscal year.
The decrease reflects a comparatively lower average level of invested cash
balances for the current year and an overall lower interest rate on short-term
investments as discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash, cash equivalents and marketable securities were $4.6
million at March 31, 2003 compared with $4.5 million at September 30, 2002. The
March 31, 2003 total includes a corporate bond from Pacific Gas & Electric
("PG&E") with a carrying value of $920,000 on March 31, 2003. This bond matured
December 24, 2001 and, although PG&E remains current on its interest payment
obligations, the principal amount of this bond has not yet been paid. On April
6, 2001, PG&E filed for Chapter 11 bankruptcy protection. In 2002, PG&E and the
State of California asked PG&E's creditors to
10
vote on two separate reorganization proposals. A certification of the results of
voting was filed with the U.S. Bankruptcy Court for the Northern District of
California on September 9, 2002. However, as of March 31, 2003, the bankruptcy
court had not confirmed either plan of reorganization. While PG&E's management
has stated their intent to pay their creditors, the numerous political and
economic factors influencing the California utility market coupled with PG&E's
bankruptcy filing could potentially impact the timing and/or actuality of
payments. However, the Company currently believes that it will realize the full
value of this investment.
The Company generated a net $144,000 of cash from operating activities
during the quarter, primarily reflecting net income before depreciation offset
by increases in current assets and decreases in current liabilities.
During the fiscal quarter ended June 30, 2002, the Company entered into an
agreement with Coloplast granting Coloplast exclusive marketing and distribution
rights with respect to the Company's Release-NF Foley catheters in certain
geographic areas. Coloplast paid the Company $1,000,000 for these exclusive
rights. In accordance with generally accepted accounting principles, the Company
recognized $25,000 of this amount as revenue in the second quarter of fiscal
2003 and the remaining amount not recognized in prior periods constitutes
deferred revenue which will be recognized over the term of the agreement.
During the fiscal quarter ended March 31, 2002, the Company entered into a
$1,000,000 revolving line of credit with U.S. Bank National Association. As of
March 31, 2003, the Company did not have any amounts outstanding under this line
of credit.
During the six-month period ended March 31, 2003, the Company's working
capital position, excluding cash and marketable securities, increased by a net
$917,000. Accounts receivable balances during this period increased 17% or
$321,000 primarily as a result of increased sales and the timing of orders.
Inventories increased 3% or $104,000 primarily as a result of the Company
expanding its product lines, and increasing its production of finished goods to
meet customer demand. Other current assets increased 116% or $255,000 during the
recent six-month period primarily as a result of prepaid insurance premiums and
prepayments relating to certain manufacturing equipment. Current liabilities
decreased 14% or $237,000 during the recent six-month period, primarily
reflecting the timing of payments relating to accounts payable executive bonus
compensation. In addition, capital expenditures during this period were
$142,000, representing an increase of 12% from the prior fiscal year's period.
The Company believes that its capital resources on hand at March 31, 2003,
together with revenues from sales, will be sufficient to satisfy its working
capital requirements for the foreseeable future as described in the Liquidity
and Capital Resources portion of Management's Discussion and Analysis of
Financial Condition and Results of Operations in the Company's Annual Report on
Form 10-K (Part II, Item 6) for the fiscal year ended September 30, 2002.
However, the Company may be required to seek additional funding sources, such as
additional borrowings under the Company's revolving line of credit or equity or
debt financings, to fund the Company's working capital requirements. If the
Company decides to seek additional financing, there can be no assurance as to
the outcome of such efforts, including whether financing will be available to
the Company, or if available, whether it would be on terms favorable to the
Company and its shareholders. Failure by the Company to secure additional
financing could result in significant cash constraints and financial issues for
the Company.
11
FORWARD-LOOKING STATEMENTS
Statements other than historical information contained herein constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements may be identified
by the use of terminology such as "believe," "may," "will," "expect,"
"anticipate," "predict," "intend," "designed," "estimate," "should" or
"continue" or the negatives thereof or other variations thereon or comparable
terminology. Such forward-looking statements involve known or unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things, the
following: the uncertainty of gaining acceptance of the hydrophilic intermittent
catheters, the Release-NF Foley catheters and the FemSoft Insert in the
marketplace; the uncertainty of gaining new strategic relationships; the
uncertainty of timing of revenues from private label sales (particularly with
respect to international customers); FDA and other regulatory review and
response times; manufacturing capacities for both current products and new
products; the uncertainty of insurance coverage of the FemSoft Insert by
additional insurers; the uncertainty that initial consumer interest in the
FemSoft Insert may not result in significant sales of the product or continued
sales of the product after trial; the results of product evaluations; the
securing of Group Purchasing Organization contract participation; results of
clinical tests; the timing of clinical preference testing and product
introductions; and other risk factors listed from time to time in the Company's
SEC reports, including, without limitation, the section entitled "Risk Factors"
in the Company's Annual Report on Form 10-K (Part II, Item 6) for the year ended
September 30, 2002.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company does not believe that there is any material market risk
exposure with respect to derivative or other financial instruments which would
require disclosure under this item. However, as disclosed under Note D to the
Company's financial statements that appears on page 6, the bankruptcy of PG&E
could potentially impact the timing and/or actuality of payment of our $1.0
million PG&E corporate bond.
ITEM 4. CONTROLS AND PROCEDURES
The Company's Chief Executive Officer and Chief Financial Officer have
concluded, based on their evaluation within 90 days of the filing date of this
report, that the Company's disclosure controls and procedures are adequately
designed to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the Securities and Exchange Act of
1934, as amended, is recorded, processed, summarized and reported, within the
time periods specified in applicable rules and forms. There have not been any
significant changes in the Company's internal controls or in other factors that
could significantly affect those controls, subsequent to the date of such
evaluation, including any corrective actions taken with regard to significant
deficiencies and material weaknesses.
12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 2003 Annual Meeting of Shareholders of Rochester Medical
Corporation was held on Thursday, January 30, 2003, at the Minneapolis Hilton
and Towers Hotel in Minneapolis, Minnesota.
The holders of 5,215,094 shares of common stock, representing 97.85% of
the 5,329,750 outstanding shares entitled to vote as of the record date, were
represented at the meeting in person or by proxy. Management's entire slate of
seven directors listed in the proxy statement was elected to serve until the
next Annual Meeting of Shareholders by the following vote tallies:
For Authority Withheld
--------- ------------------
Darnell L. Boehm 5,095,016 120,078
Anthony J. Conway 5,182,571 32,523
Peter R. Conway 5,196,661 18,433
Philip J. Conway 5,175,771 39,323
Richard D. Fryar 5,182,571 32,523
Roger W. Schnobrich 5,095,016 120,078
Benson Smith 5,203,471 11,623
The Company's shareholders ratified the selection of Ernst & Young LLP
as the Company's independent auditors by the following vote tallies:
For Against Abstain
-------- ------- -------
5,201,954 6,275 6,865
13
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
99.1 Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
99.2 Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K:
None.
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROCHESTER MEDICAL CORPORATION
Date: May 13, 2003 By: /s/ Anthony J. Conway
---------------------------------------
Anthony J. Conway
President and Chief Executive Officer
Date: May 13, 2003 By: /s/ David A. Jonas
--------------------------------------
David A. Jonas
Chief Financial Officer and Treasurer
CERTIFICATIONS
I, Anthony J. Conway, Chief Executive Officer of Rochester Medical Corporation,
certify that:
1. I have reviewed this quarterly report on Form 10-Q of Rochester Medical
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
15
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 13, 2003 /s/ Anthony J. Conway
-----------------------------------
Chief Executive Officer
I, David A. Jonas, Chief Financial Officer of Rochester Medical Corporation,
certify that:
1. I have reviewed this quarterly report on Form 10-Q of Rochester Medical
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
16
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 13, 2003 /s/ David A. Jonas
-----------------------------------
Chief Financial Officer
17
INDEX TO EXHIBITS
EXHIBIT PAGE
- ------- ----
99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002......................................................................
99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002......................................................................